Skip to content
By  David J. Eiswert

Inflation, Energy and Market Volatility - Perspectives on Global Equities

What’s in store for global equities? David Eiswert discusses interest rates, energy and market volatility

October 2024 -


Transcript

On inflation and interest rates…

So I do think there are many parts of inflation that are sticky. And I think we can talk about why I think some of those things are sticky. But I really thought that Chinese growth would have made inflation a worse problem in the last year. And so, you know, I think Xi Jinping has been, you know, he's my favourite Fed governor, right, because he's been able to really soft land the US economy. And I really think that's what's happened. The headline inflation in the US is now, you know, in the 2% range and it's really driven by commodities and food and goods and that's really been driven by China.

You want some inflation. I think that's healthy for earnings growth. But you, you, you haven't had the kind of inflation that required high, sustainably high rates. And basically it has enabled the Fed to do kind of a policy adjustment, which is effectively what they're doing, right. They're saying, yeah, we see unemployment's rising a little bit. Inflation's now within our zone, you know, rates are too high. So we're going to lower rates a little bit. I mean, what, what could be really interesting about that looking ahead the next year or so is that, you know, we may not get a big cutting cycle. We may get a relatively shallow cutting cycle because there's no, there's no crisis they're reacting to, right? So the economy is likely to stabilize from these cuts.

On energy…

I think energy is really interesting, especially the US majors. And I think what's happening in energy – so we talked about how the world is a more dangerous place – but what's really happening in energy, and I would add in there that AI consumes massive amounts of electricity, right? Just incredible amounts of electricity. So the whole area of power secularly is really interesting.

The other thing that's happening is US shale production is slowing. So if you think about it, think about it simply like this. They drilled all the good stuff first and in fact, they drilled it too close together, right? So you're starting to see slowing productivity across U.S. oil. They're still improving productivity. It's still an interesting place. But what's happening is a lot of assets and acreage is becoming stranded and it's being rolled up. So if you look at Exxon buying Pioneer or Chevron bought Marathon and you're, you're seeing a bunch of different M&A activity. And what's happening is these bigger companies are coming in and controlling more parts of the Permian Basin, the Bakken Basin. So it's going from being a wildcatting exercise, zero interest rates, borrow some money, go drill a well, sell yourself to private equity. That was really happening between the GFC and COVID, and it's turning into more of a mature kind of business. And that industry structure combined with what Saudi needs, the Saudi needs oil prices to be a certain level to manage, to balance their budget right, and to do the things they want to do. And so that industry structure starts to look really attractive.

On market volatility…

There's a lot of stimulus set up to sort of reaccelerate the economy once we get past this election period. And one of the things I think we all focus on doing well is having a fundamental view about which companies are creating value and then taking advantage of periods of volatility. So when things are selling off, when there's a lot of concern, when defensives are overvalued and being able to look sort of out further. So I would encourage everyone to kind of the next, the last two months, the next two months can be volatile, but when you're looking out past the US election, right, and you're looking out into 2025, you know, really don't focus so much on defense, focus on this too will pass. And the fundamentals in the world are, are, are pretty stable.

David J. Eiswert Portfolio Manager

David Eiswert is a portfolio manager in the U.S. Equity Division of T. Rowe Price. He is the portfolio manager for the Global Focused Growth Equity Strategy, a role he has held since October 1, 2012. Prior to his current role, Mr. Eiswert was the portfolio manager for the Global Technology Strategy from October 2008 until May 2012. He was a technology analyst from 2003 until 2012. Mr. Eiswert is a vice president of T. Rowe Price Group, Inc.

Oct 2024 • From the Field • Article

Key considerations for global equities beyond the U.S. election

Powerful factors provide a relatively positive backdrop for equity markets in 2025.
By  David J. Eiswert
Sep 2024 • From the Field • Article

Are we partying like it's 1999 again?

AI versus Dotcom: There are some similarities, yet also key differences.
By  Rahul Ghosh

Important Information

This material is provided for general and educational purposes only and is not intended to provide legal, tax, or investment advice. This material does not provide recommendations concerning investments, investment strategies, or account types; it is not individualized to the needs of any specific investor and not intended to suggest any particular investment action is appropriate for you.

Any tax-related discussion contained in this material, including any attachments/links, is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding any tax penalties or (ii) promoting, marketing, or recommending to any other party any transaction or matter addressed herein. Please consult your independent legal counsel and/or tax professional regarding any legal or tax issues raised in this material.

The views contained herein are as of the date written and are subject to change without notice; these views may differ from those of other T. Rowe Price associates.

This information is not intended to reflect a current or past recommendation concerning investments, investment strategies, or account types, advice of any kind, or a solicitation of an offer to buy or sell any securities or investment services. The opinions and commentary provided do not take into account the investment objectives or financial situation of any particular investor or class of investor. Please consider your own circumstances before making an investment decision.

Information contained herein is based upon sources we consider to be reliable; we do not, however, guarantee its accuracy.

Past performance is not a reliable indicator of future performance. All investments are subject to market risk, including the possible loss of principal. All charts and tables are shown for illustrative purposes only.

T. Rowe Price Investment Services, Inc., distributor, and T. Rowe Price Associates, Inc., investment adviser.

© 2024 T. Rowe Price. All Rights Reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE, and the Bighorn Sheep design are, collectively and/or apart, trademarks of T. Rowe Price Group, Inc. RETIRE WITH CONFIDENCE is a trademark of T. Rowe Price Group, Inc.

3906865

Open

Audience for the document: Share Class: Language of the document:
Open Cancel

Download

Share Class: Language of the document:
Download Cancel
Sign in to manage subscriptions for products, insights and email updates.
Continue with sign in?
To complete sign in and be redirected to your registered country, please select continue. Select cancel to remain on the current site.
Continue Cancel
Once registered, you'll be able to start subscribing.

Change Details

If you need to change your email address please contact us.
Subscriptions
OK
You are ready to start subscribing.
Get started by going to our products or insights section to follow what you're interested in.

Products Insights

GIPS® Information

T. Rowe Price ("TRP") claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. T. Rowe Price has been independently verified for the 27-year period ended June 30, 2023, by KPMG LLP. The verification report is available upon request. A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis. Verification does not provide assurance on the accuracy of any specific performance report.

TRP is a U.S. investment management firm with various investment advisers registered with the U.S. Securities and Exchange Commission, the U.K. Financial Conduct Authority, and other regulatory bodies in various countries and holds itself out as such to potential clients for GIPS purposes. TRP further defines itself under GIPS as a discretionary investment manager providing services primarily to institutional clients with regard to various mandates, which include U.S, international, and global strategies but excluding the services of the Private Asset Management group.

A complete list and description of all of the Firm's composites and/or a presentation that adheres to the GIPS® standards are available upon request. Additional information regarding the firm's policies and procedures for calculating and reporting performance results is available upon request

Other Literature

You have successfully subscribed.

Notify me by email when
regular data and commentary is available
exceptional commentary is available
new articles become available

Thank you for your continued interest